Several months after the government announced a package of support for small businesses to help them through the disruption of the pandemic and subsequent lockdown, the banks administering the government’s Coronavirus Small Business Interruption Loan Scheme issued a warning. UK banks told the government that between 40-50% of the businesses in receipt of the loans would be likely to default when support was withdrawn, threatening to make a mockery of the ingeniously-named ‘bounceback loan’ system.

Given the loans are issued by the government, and simply administered by the banks, the latter were less concerned with the impact the defaults might have on their balance sheets than they were the administrative and PR implications of commencing insolvency proceedings against hundreds of thousands of UK small businesses. The government, meanwhile, seems blithely unconcerned about the economic and political impact of doing the same.

More than a year after the banks issued their first warning, many of the businesses that took government support—and which have survived the pandemic thus far—will begin making repayments on their loans. The furlough scheme is also coming to an end, meaning these business will be hit by a significant increase in costs as the Delta variant spreads throughout the country.

Over the course of the pandemic, UK businesses have borrowed more than £75 billion through the government’s various small business loan schemes – mostly through the bounceback loan scheme. The interest rates on this debt may be low, but this won’t be much of a comfort to business owners facing a sudden hike in costs in the context of massive continued economic uncertainty.

Small business owners are, of course, the Conservative Party’s core constituency. Those who have most enthusiastically bought into the neoliberal dream of escaping from the exploitation and bondage of the modern workplace by starting a business tend to be highly receptive to calls for ‘free market’ interventions like cutting corporate tax rates and labour market regulation.

But even if the Left can’t hope to win over this constituency, there is another reason why we should be concerned about the collapse of up to half of the UK’s businesses. In the UK and around the world, the pandemic has accelerated a trend towards market concentration that is deepening the imbalance of power between capital and labour.

Even before the pandemic, capital was becoming more centralised—a Marxist term, which signifies the accretion of greater amounts of economic activity into a few large units—than ever before.

In 2018, the Resolution Foundation released a report showing that ‘Britain’s 100 biggest firms now account for nearly a quarter (23 per cent) of total revenue across British business, up by 25 per cent since 2003-04’. In the US, Thomas Philippon has provided evidence of a sharp increase in market concentration during the late 1990s and early 2000s.

Philippon argued in his book The Great Reversal that the trend towards market concentration was proceeding at a much faster pace in the US than in Europe, but Dutch economist Jan Eeckhout has shown in his book The Profit Paradox that both economies are plagued by the problem of market power.

Market concentration tends to worsen during economic crises. This observation is nothing new – Marx wrote in the first volume of Capital that during economic crises ‘[c]apital grows in one place to a huge mass in a single hand, because it has in another place been lost by many’.

The 2008 Financial Crisis and its aftermath saw an increase in market power throughout the US, the UK, and Europe as weaker firms went under, only for their assets and markets to be gobbled up by larger, stronger competitors.

In the ten years after 2008, record low interest rates made it easier both for very large firms to buy up competitors and for weaker firms to survive as ‘zombies’, paying off only the interest on their outstanding debt. When the pandemic hit, these zombie firms were some of the first to go under.

Smaller but still-viable firms that were able to access government support may have clung on until now, but with the removal of government support we could be about to witness another wave of bankruptcies.

Low interest rates and central bank asset purchase are likely to persist into the future, meaning low borrowing costs for the most powerful firms, which will then find themselves much better-able to buy up their competitors. With the neoliberal shift in competition policy away from consideration of public interest and toward a narrow concern with ensuring market power doesn’t impact prices, this anti-competitive behaviour is unlikely to be met with any significant action from regulators.

It’s also worth bearing in mind that the Financial Crisis and the pandemic have had a particularly significant impact on market concentration because they’ve aligned with pre-existing technological trends. The rise of the Big Tech giants, which benefit from huge economies of scale and whose business models often rest on capturing entire markets, is, more than anything else, what has made market power such a hot topic.

We know that firms with more market power are much more likely to increase prices, depress wages, and avoid taxes. But market power also often translates into political power, meaning these firms are uniquely able to shape the very rules they’re expected to follow. After a few turns of the revolving door, it becomes difficult to make out where the capitalist state ends and the monopolistic firm begins.

In the ongoing battle between workers and bosses, the owners and managers of firms with a great deal of market power are at a distinct advantage. Often the only large employer in a particular area, workers will feel as though they have no choice other than to accept the terms offered them by the Amazons and Walmarts of the world.

Unless working people organise to resist it, the legacy of the pandemic, like the legacy of the financial crisis, will be a permanent shift in power in favour of capital.